The Sky Savings Rate (SSR) has been set to be decreased from 6.50% to 4.50% on March 20th. This proposal recommends updating the USDS Borrow Rate accordingly.
Motivation
Following the recent proposal to adjust the SSR to 4.50% , this publication recommends aligning other key parameters by reducing the Base on Core and Slope1 on Prime by 2.00% each. This adjustment would ensure coherence with the new rate framework.
The chart below highlights the deposit rates for USDC and USDT on Aave over the past 90 days in comparison to the SSR. Even after the SSR was lowered ten days ago, it continues to offer superior yields relative to USDC and USDT. This is primarily driven by the ongoing decline in borrowing rates for these assets since mid-December. In this context, depositing SUSDS remains a much more compelling option for yield generation.
Specification
Prime Instance
Detail
Current
Proposed
Change
Base
0.75%
0.75%
0.00%
Slope1
6.50%
4.50%
-2.00%
Slope2
35.00%
35.00%
0.00%
Borrow Rate at Uoptimal 5.25%, exceeding SSR by 0.75%.
Core Instance
Detail
Current
Proposed
Change
Base
6.50%
4.50%
-2.00%
Slope1
0.75%
0.75%
0.00%
Slope2
35.00%
35.00%
0.00%
Borrow Rate at Uoptimal 5.25%, exceeding SSR by 0.75%.
Disclosure
TokenLogic does not receive any payment for this proposal.
Next Steps
Implement the proposed parameter changes via a Direct-to-AIP process.
Chaos Labs supports the proposed parameter changes in accordance with the reserve strategy, and will begin to perform such decreases through the risk steward. The rationale and intended outcomes are detailed in this and this AGRS update. The ensuing decrease will adhere to the Risk Steward 50bps constraint of both the Base and Slope1 parameters within the respective reserves:
Instance
Asset
Parameter
Current
Proposed
Ethereum Core
USDS
Base
6.50%
6.00%
Ethereum Prime
USDS
Slope1
6.50%
6.00%
Disclaimer
Chaos Labs has not been compensated by any third party for publishing this AGRS recommendation.
USDS Core and Prime timelock has ended, we will now perform the following interest rate updates through the risk steward (adhering to constraints per Risk Steward Parameter Updates Phase 3):
Instance
Asset
Parameter
Current
Proposed
Ethereum Core
USDS
Base
6.00%
5.00%
Ethereum Prime
USDS
Slope1
6.00%
5.00%
Disclaimer
Chaos Labs has not been compensated by any third party for publishing this AGRS recommendation.
USDS Core and Prime timelock has ended, we will now perform the following interest rate updates through the risk steward, fully aligning with the initially proposed specification:
Instance
Asset
Parameter
Current
Proposed
Ethereum Core
USDS
Base
5.00%
4.50%
Ethereum Prime
USDS
Slope1
5.00%
4.50%
Disclaimer
Chaos Labs has not been compensated by any third party for publishing this AGRS recommendation.
